Symposium on Employment Relations Reform in the World Automobile Industry: Introduction

By Lansbury, Russell D.; Katz, Harry C. et al. | The Economic and Labour Relations Review : ELRR, December 1997 | Go to article overview

Symposium on Employment Relations Reform in the World Automobile Industry: Introduction


Lansbury, Russell D., Katz, Harry C., Park, Fun-Koo, The Economic and Labour Relations Review : ELRR


The international automobile industry provides a useful basis for examining the degree and nature of change in employment relations under a variety of external conditions. By studying auto firms in various economies, it can be observed how employee relations strategies relate to overall governance of the firm, to industry-level structures and institutions, and to the macro-economic and political institutions. These broader institutional arrangements in industrial relations may have a significant effect on how well the industry operates in both the domestic and international marketplace.

From the studies which have been undertaken in a wide range of countries and automotive companies, some general patterns have emerged (see Kochan et al, 1997). Yet there are considerable variations in the pace of change and the degree to which both firms and industries in different countries have been able to adapt through incremental adjustments, as opposed to fundamental transformations.

One common aspect of the adaptation process has been the search for greater flexibility in how work is organised and labour is deployed. Those systems which already have institutional arrangements that promote flexibility, and are generally decentralised in terms of their employment relations, have been better able to adapt through incremental adjustments. These include mature industrialised market economies, as well as some of the newly industrialising economies. For example, decentralisation has been particularly beneficial in the United States by providing the opportunity for wide-ranging experimentation with new work methods. By contrast, economies which have more centralised systems have had greater difficulties in adjustment.

Another feature of the global auto industry, as pressures for greater productivity and quality intensify, is a greater premium being placed on workforce skills. New technologies require a higher order of both analytical and behavioural skills. Firms are having to adjust their payment systems accordingly, in order to attract and develop employees who have the required skills to ensure that the new production systems are successfully implemented and maintained. Some countries, such as Germany and Japan, which have well developed systems for skills enhancement have fared better than others. This is despite the fact that Germany and Japan have contrasting approaches to the way in which skills are acquired either on or off the job. In most economies, however, automobile producers are adapting their systems of remuneration to reward employees for skills rather than other criteria such as years of service.

A third common factor in the experience of firms in the auto industry is the challenge of providing appropriate forms of employee participation or 'voice' in governance issues at the enterprise level. In most industrialised market economies, the trade union movement has been the traditional channel for employee representation in the enterprise. Indeed, the auto industry has been one of the strongholds of unionisation featuring some of the world's leading unions such as the UAW in the United States and IG Metall in Germany. However, declining rates of unionisation in many mature economies, such as the United States and Europe, as well as the development of non-unionised plants (for example, those owned by the Japanese in North America), have greatly weakened the union movement within countries where they were previously the strongest. However, there are some exceptions where levels of unionisation have remained very high. Some European countries such as Germany, which have legislated systems for employee representation, have experienced a smaller decline in unionisation. Newly industrialising economies such as the Republic of Korea, meanwhile, have experienced increases in unionisation and union militance. The issue of employee representation and involvement, nevertheless, remains a concern for the auto industry in all parts of the world. …

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